The Biden administration has implemented regulations mandating a significant portion of Americans to switch to electric vehicles (EV) in the near future, even as U.S. companies face challenges in manufacturing these products. This situation has raised concerns among experts about the possibility of relying on Chinese vehicles to meet the current targets.
The Environmental Protection Agency (EPA) recently established emission standards for light-duty vehicles, aiming for 67% of new models sold to be electric or hybrid by the end of 2032. This move is intended to accelerate the transition to EVs and reduce carbon emissions. Despite the sluggish demand for American EVs, leading to losses and production delays for automakers like Tesla and Rivian, the regulations remain in place. Experts have suggested that China’s EV industry could potentially step in to address the gap created by the slow growth of the U.S. market, as reported by the Daily Caller News Foundation.
“China’s EV production would pose no risk to American consumers or U.S. geopolitical security if we had a free market allowing U.S. companies to concentrate on their comparative advantage in pickups, SUVs, and minivans, and allowing consumers to decide which types of vehicles best meet their needs,” Marlo Lewis, senior fellow at the Competitive Enterprise Institute, told the DCNF. “EV mandates, however, create a captive market for EV producers, and China is today the world’s top EV producer.”
BYD, the leading electric vehicle manufacturer in China, has seen a remarkable surge in growth in recent years, with annual profits increasing by 80.72% year-on-year in 2023 as a result of its global expansion efforts. However, the company has faced challenges entering the American market due to existing restrictions. In the first 11 months of 2023, electric vehicles and hybrids accounted for 30% of total car sales in China. China’s dominance in the electric vehicle supply chain is evident through its control of the minerals necessary for battery production. The country currently holds 87% of the world’s mineral refining capacity, while the United States’ efforts to boost its own capacity have not yet been successful.
In an attempt to reduce costs for consumers and promote the purchase and production of American electric vehicle models, the Biden administration introduced a $7,500 tax credit. This incentive, however, is contingent on manufacturers limiting the use of components from countries of concern, such as China. Despite these measures, new electric vehicle sales in the U.S. only grew by 2.7% in the first quarter of the year, falling short of the 5% growth seen in overall vehicle sales and resulting in a decrease in electric vehicle market share to 7.1%.
Major automakers like Bentley, GM, Ford, Mercedes-Benz, and Honda have adjusted their electric vehicle targets as consumer demand for these products has not met expectations.
“So, if U.S. manufacturers are forced to keep making high-priced EVs, their market share could contract while BYD’s increases,” Lewis told the DCNF. “Global auto industry leadership would shift from the United States to China. California and EPA’s EV campaign could end up helping fulfill China’s ambition to be the world’s leading superpower.”
The Biden administration has implemented regulations on heavy-duty vehicles, such as trucks, mandating that by 2032, a minimum of 25% of new long-haul trucks and 40% of all new medium-sized trucks must be electric or zero-emission.
Numerous American car companies have suffered significant financial setbacks as a result of electric vehicle (EV) development and sales. For instance, Ford reported a $4.7 billion loss on EVs in 2023, equating to nearly $65,000 lost on each EV sold. Meanwhile, General Motors faced a $1.7 billion loss in the fourth quarter of 2023, despite strong overall profits.
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